It’s Official, Price Transparency Regulations are Coming. Are You Ready?
After months of debate, on June 23, a federal judge ruled in favor of government’s price transparency executive order requiring all hospitals to provide patients with clear, accessible information about their “standard charges” for the items and services they provide. The American Hospital Association (AHA) says it will appeal the decision, but hospitals are now on the hook to meet a January 2021 price transparency compliance deadline.
The Price Transparency final rule requires that your hospital:
- Make standard charges and negotiated rates public through a machine-readable file
- Provide the minimum and maximum negotiated charges for 300 common shoppable services in a consumer-friendly manner
Both must be easily available on your website and updated annually. While the hospital groups that filed suit to stop the rule have promised to appeal, pinning their hope on help from a higher court and the success of an appeal is not a smart strategy for hospitals that, at this time, will have to comply in less than six months. Accepting the ruling and moving forward with price transparency compliance measures is the best approach and partnering with a vendor who can easily implement the healthcare cost transparency solutions needed is the easiest, fastest way to prepare for the new regulations.
Don’t Get Distracted from Hospital Priorities
Putting the rule aside for a moment, CFOs and revenue cycle executives should focus on what is important to the hospital as a business—improving revenue capture while delivering patient-centric, meaningful price transparency.
The belief in Washington D.C. is that by requiring hospitals to disclose contracted rates publicly on their websites, “price transparency” will be the result. CMS contends this disclosure will create competition and drive prices down.
In preparation for this ruling, we’ve spent the past year focused on a forward thinking strategy to ensure we can provide clients with solutions that meet and exceed CMS compliance requirements in advance of the 2021 deadline. Our hospital price transparency solutions meet the compliance requirements, but more importantly ensure meaningful price transparency that people care about by showing what their out-of-pocket costs will be for individual procedures. As a result, this enables conversations about payment earlier in the revenue cycle, which helps increase pre-service revenue collected, decrease cost to collect and increase patient satisfaction, trust and engagement.
How to Answer the Patient Question, “How Much Will I Owe?”
As we have discussed in previous blogs, meaningful price transparency has nothing to do with whether hospitals are required to share rates they have negotiated with payers. Put simply, meaningful price transparency at the hospital or health system level means improving patient visibility into accurate out-of-pocket costs.
Your hospital’s ability to accurately estimate out-of-pocket costs prior to service allows you to secure payment, or establish a financial assistance or a payment plan much earlier in the episode of care. Hospitals often wait until the billing stage to ask for patient payment, which can cause expensive delays in receiving payment and costly rework by revenue cycle teams.
Patient estimation software is relatively easy to incorporate into the revenue cycle. Adding this capability saves time and effort for revenue cycle teams and provides earlier revenue recognition—a goal that should be paramount in any patient revenue cycle strategy. Coupled with proper scripting around financial conversations with patients, these efforts can make a significant impact on a hospital’s bottom line.
Better yet, providing patients with this information prior to service is a big factor in patient satisfaction. If you approach price transparency in this way, your hospital will comply with the official price transparency rule, but you’ll also achieve the quantifiable business benefits mentioned above.
Start the Patient Responsibility Conversation Earlier
Patient estimation software, whether using a patient-facing online tool or tools available to registration staff, enables hospitals to start financial responsibility conversations earlier in the revenue cycle.
To deliver meaningful and actionable healthcare cost transparency, hospitals must offer insight into patients’ specific, customized out-of-pocket costs for procedures, including all the likely ancillary charges that usually come with the procedure. To provide those cost estimates, you need visibility into:
- Contracted or negotiated price for service
- Charges for services customarily provided in conjunction with the primary service
- Specific service level benefit coverage and rate
- Co-insurance impact on the amount the patient will owe
- Deductible and remaining balance
The good news is, you are likely already gathering most of this information. In fact, 87% of providers have the ability to share cost estimates but only 18% of patients currently receive one without asking. So, what’s the problem? Simply, many hospital revenue cycles are not set up to provide this information prior to service or in a consumer-friendly manner. This is key because it gets to the heart of why revenue cycles are often so inefficient, why meaningful price transparency is so elusive, and why the government decided it needed to step in with a rule.
If you have a patient-facing price estimator tool, you need only one more component to comply, which is the machine-readable file. AccuReg offers machine-readable file functionality as part of our suite of products to ensure full compliance with the rule.
Keep Your Strategic Focus on Patient Cost Transparency
As a revenue cycle leader or CFO, your strategic focus should be on providing patients what they need when they are contemplating a procedure—visibility into their own costs. Patients will remember their positive financial experience and refer your hospital to close friends or relatives when they seek care.
And as a byproduct of this approach to price transparency, you will comply with the government’s version of price transparency but most importantly, you will provide the kind of price transparency that really matters to patients. To learn more about our patient estimation and price transparency software and how your hospital can provide patients with the cost transparency they need and what the government is requiring by 2021, download our eBook, Price Transparency Success: Comply with CMS Requirements, Increase Pre-Service Revenue, Delight Patients.